Great growth stocks are everywhere these days, and plenty of them come from outside America’s borders. And when looking for the best international stocks, you may find that a large number of them originate from the same country…
First, a confession: I’m a China guy. My handle on Twitter is @ChinaHandPaul and when I took over the writing of what is now Cabot Global Stocks Explorer in 2005, it was still called Cabot China Investor Report. The first stock I ever recommended to subscribers was Shanda Interactive (SNDA), a company that pioneered online games in China but eventually lost the online dog fight to NetEase (NTES) and is no longer in business.
But every couple of weeks, as I’m preparing to write a new issue of Cabot Global Stocks Explorer, I look at the charts of every emerging market stock that trades on U.S. exchanges as an ADR. Every single one.
Sure, Chinese stocks have dominated my recommendations over the years, but it’s not because I prefer Chinese stocks to those of Brazil, Russia or India. It’s just that China has for years offered the best combination of enormous population, rapid urbanization, economic expansion, ballooning Internet access and entrepreneurial vigor.
Over the years, I’ve made a lot of presentations to thousands of investors about the potential and performance of emerging market stocks. And I’ll have to admit that it’s a little frustrating to watch my well-reasoned arguments bounce off investors who refuse to consider investing outside the U.S. I think I’m like a junebug hitting the windshield of a speeding car; I make an impact, but I don’t really penetrate their defenses.
Over the next several weeks, I’m going to be writing about five emerging market stocks that I think present excellent opportunities for growth investors. Let’s call them the five best international stocks to invest in right now.
And in a shameless bid to interest home-focused U.S. investors, I’m going to contrast each one with a well-known U.S. company.
I can’t give away my picks yet, but I can tell you that the first one I’ll be writing about will be the emerging markets equivalent of Facebook (FB), the social media company that has devoured the world and made Mark Zuckerberg a household name.
Three of my five choices will be Chinese stocks, but I’ll also target one company in South America and one in India. All of them have great-looking charts and strong positions in their national economies.
And just to show the kind of potential I’m talking about, I’m including a long-term chart of one of the stocks I’m not going to talk about. This is a company I’ve recommended on-and-off since August 2005. There have been lots of shakeouts along the way, but you can see in this monthly chart that progress over the years has been inexorable.
The stock is one I mentioned earlier: NetEase (NTES), a web portal and online game company that has been volatile, but has powered ahead over the years. This is a good example of the kind of combination of story, fundamentals and chart that I’m always on the lookout for. And I’ll be giving you five of them over the next few weeks. Stay tuned.